Relief and reform will ensure Louisiana’s oil and gas industry remains vibrant
The fate of America’s oil and gas industry is in question and will have dire consequences for the broader economy if not addressed correctly. Action is needed now to thwart the one-two punch of the demand destruction related to the COVID-19 outbreak and the supply shock resulting from the global price war, which together have forced prices plummeting into the negative and led us to a supply glut the likes of which the world has never seen.
The hundreds of thousands of people who work in – and support – the industry, should always be front of mind for policymakers as they consider how we will begin this critical economic recovery journey. From the rigs offshore to the corner stores that religiously serve early morning breakfast to industry employees – Louisiana’s industry jobs and businesses are worth fighting for.
The good news is, the administration has the ability to enact temporary changes with a stroke of a pen that would help the industry save as many jobs as possible, while continuing their fight another day. One example where the administration could quickly provide some relief is through temporarily suspending royalty payments made to the federal government for drilling on federal leases in the Gulf of Mexico; with this support many of these independent offshore producers may be able to withstand this crisis, which could save more than 20,000 direct jobs alone.
When the nation finally begins to emerge from the COVID-19 outbreak, we need to be able to ramp up production to deliver a dependable energy supply and support a robust economic recovery. If that doesn’t happen, we will face widespread unemployment and a severe disruption to our energy supply: Two things that would deliver a likely fatal economic blow to states like Louisiana.
American ingenuity has catapulted the United States toward “energy dominance,” freeing us from dependence on the Middle East and putting us at the top of the list of the world’s oil and gas producers. This newfound energy security has resulted in enormous dividends for the American people and the world, not least of which is the fact we are efficiently developing affordable energy under the world’s most exacting and stringent environmental and regulatory protections.
But now, all that progress, all those jobs, and all of the communities supported by the industry are now at stake. A recent survey by the Louisiana Oil & Gas Association showed that the volatile and uncertain market conditions places 23,000 jobs at-risk in Louisiana alone, and as many as 16,000 offshore wells could be shut-in over the coming months. Another survey showed that half of all oil and gas workers are concerned about losing their jobs.
We are thankful for the administration and Department of Interior’s continued commitment to the industry, but maintaining the status quo when at the policy level may not be enough to respond to these extraordinary circumstances. We’re asking President Trump for swift action to allow the Interior secretary to utilize his full powers under existing law – such actions that could help save thousands of American jobs and allow the entire energy supply chain continue its role in supporting a strong American economy.
Gifford Briggs is president of the Louisiana Oil and Gas Association.
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